Infrastructure and Pareto's Law
This was posted yesterday.
Drove to a wedding in Charlottesville, VA area last week. From northern Delaware to Charlottesville all major roads, except route 66 in N. VA, were in very good condition. Route 66 is always under improvement. I-95 was in the best shape I've seen in years. Semi-rural roads leading into Charlottesville also in good shape.We traveled on a Friday morning. Very heavy traffic on all major roads. Tons of truck traffic.
I think infrastructure is already very well funded. Failures seem to be a local matter. Redirected funds, inept politicians and corruption at local/municipal level lead to calls for more federal funds which are used to cover the local failures and/or crumbling tax base.
Many people think that traditional infrastructure (roads, bridges, sewer etc.) will not be funded without federal intervention. They forget, or do not understand, that they are taxed at all levels to fund infrastructue. State/local gas taxes, municipal / county / state taxes directed to all sorts of projects.
States and municipalities can issue bonds related to infrastructure. Florida and Texas should gave no problem raising funds through bond issues.
I think the current infrastructure bill is just the latest con job in the ongoing national shakedown.
The infrastructure bill that Biden signed into law last week is generally popular with the public. It should not be.
The main beneficiaries of repairs to infrastructure are residents of local political jurisdictions. If the community needs better roads, the community should pay for those roads through taxation or bond issues. Residents should bear the primary beneficiaries; therefore, residents should be the ones who bear the political costs of improvements in infrastructure.
In this way, political authority is retained at the local level. This is where it ought to be exercised. Local voters can best understand what is needed or at least wanted in local communities. There is far more accurate information regarding specifics at the local level than at the regional, state, and especially national level.
Problem: everybody wants a subsidy. Everybody wants the guy across the state or across the country to pay for improvements in local roads, pipelines, or whatever. People expect to get into their neighbors' wallets more deeply than their neighbors can get into their wallets. Everybody wants a Lake Wobegon solution.
PARETO'S LAW
As with most things in life, Pareto's 20/80 rule applies in the area of infrastructure. If the community is going to spend money on repairing a highway, it should spend the money on the highway that has the most traffic. Of course, there is always the problem of diverting traffic during the repair time. But that is going to be true whether the repairs are funded by local taxation or the federal government.
There are lots of bad roads, bad bridges, and bad pipelines across the country. We can pretty well guess that 80% of the nation's infrastructure is being neglected. There is a reason for this. From a political standpoint, the voters see to it that the repairs are applied to the infrastructure used by the top 80% of the residents. Most people live in concentrated geographical areas. In the boondocks, there are not many voters. In the boondocks, infrastructure tends to fall into disrepair.
Where there is a lot of traffic, the roads are generally in good repair. This is especially true where there is a lot of commercial traffic. The highways of the United States that are most used by 18-wheel trucks are in good repair. The truckers pay taxes to keep the roads in repair. These are the kinds of taxes that come fairly close to being paid by the users. That is the best form of tax that there is.
There is no question that Highway 66 is not what it used to be. Hardly anybody gets his kicks on Route 66.
With the exception mainly of the endless logjam in Memphis, Highway 40 is a fast, fairly smooth highway. It was admittedly bumpy across the state of Arkansas two decades ago, but the state finally got its act together and improved the asphalt.
BOONDOGGLES R US
The basic rule of politics is this: everybody wants a subsidy. If they think they can get a subsidy from the guy behind the tree, they are not going to vote for projects that improve local infrastructure.
Whenever the federal government is not there to hand out billions of dollars of project money, local communities find ways of funding infrastructure erosion that affects the greatest concentration of voters.
The fact that the infrastructure bill has allocated $65 billion to install high-speed Internet in rural areas is indicative of the existing Pareto distribution of these services. Mostly urban Americans are going to be taxed to provide this service for a comparative handful of rural residents.
Politicians always want public transit. They want to control access to downtown areas. They want to subsidize the poor who do not own cars. Therefore, says Forbes, "the package also includes the largest-ever federal investment in public transit, allotting $39 billion to modernize systems, improve access for the elderly and people with disabilities, and repair more than 24,000 buses, 5,000 railcars and thousands of miles of train tracks."
The federal government always wants to subsidize that classic money-losing boondoggle, Amtrak. "The legislation marks the largest investment in passenger rail since the creation of Amtrak 50 years ago, with $66 billion earmarked for high-speed rail, safety improvements, Amtrak grants and modernization of the rail route connecting Washington, D.C., to Boston." This subsidizes upper-middle-class residents of the high-income Northeast who do not want to pay full-ticket for their transportation costs.
Then there is the subsidy to Elon Musk. "Electric cars, buses and ferries: In addition to $7.5 billion for the nation’s first network of electric-vehicle chargers along highway corridors, lawmakers have shored up $5 billion for zero-emission buses (including thousands of electric school buses) and $2.5 billion for ferries."
And so it goes, project after project. Local people in each special-interest group want the rest of the voters to subsidize their local lifestyles. This infrastructure bill is a classic Christmas tree of boondoggles for special-interest groups whose members will not have to pay for the improvements that they claim are necessary for national well-being.
CONCLUSION
Warning: Lake Wobegon is mythical. There are always winners and losers in government projects. The winners benefit at the expense of the losers. At the top of the list of beneficiaries are the career government administrators who will oversee these projects. For them, this $1.2 trillion boondoggle is the dream of a lifetime.